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CFPB Collecting Info on Consumer Experience with Student Loan Service

Tuesday, June 23, 2015 6:40 AM

A few weeks ago, the Consumer Financial Protection Bureau announced that they were gathering information about student loan servicers, the companies responsible for collecting and processing student loan payments. They now want to know about your problems with student loan debt, and they request you submit your input and ideas by July 13, 2015.

Although student loans are usually thought of as a younger American issue, in reality there are an increasing number of older Americans paying back student loan debt. Many older consumers struggle with student loan debt, sometimes forcing them to delay retirement or threatening their financial security when in retirement.

Older consumers may hold student loan debt because they are still paying off loans that were:

accrued when they were much younger

acquired during the course of a mid- or late-career switch, or

taken out for the education of their children or grandchildren

According to a recent Government Accountability Office report, here are some concerning trends about older consumers and student loan debt:

Between 2005 and 2013, outstanding federal student loan debt owed by older borrowers grew from less than $3 billion to more than $18 billion, more than a six-fold increase.

Delinquency rates for older borrowers doubled between 2005 and 2012, rising from 6 to 12.5 percent.

Older borrowers defaulted on federal loans at much higher rates than other borrowers. More than a quarter of federal loans owed by borrowers ages 65-74 are in default. For borrowers 75 years or older, more than half of outstanding federal loans are in default.

The number of older consumers whose social security benefits were offset for the collection of federal student loan debt increased nearly 400 percent from 2002 through 2013. For consumers 65 or older the increase was roughly 500 percent.

Many older consumers who have submitted complaints to the Bureau about student loans report being billed for loans they never borrowed, receiving harassing and abusive debt collection calls, being wrongly charged fees because of the servicer’s accounting errors, and having their credit rating impacted by incorrect reporting of student loan information.

CFPB is asking for more information from consumers. If you’ve had problems with student loan debt or run into repayment roadblocks. Here are just a few things you can tell them about:

Disclosure, accessibility, and availability of options to release a co-signer from their legal obligation to repay a co-signed student loan

Disclosure, accessibility, and availability of options to discharge or reduce student loan debt in the event of the death or disability of a borrower or co-signer

Processing, allocation, and application of loan payments

The imposition and disclosure of late fees

The complaint resolution process (including how allegations of fraud are resolved)

Furnishing of credit information to credit reporting agencies

To share your story for the public record, go to regulations.gov. They ask that you don’t include sensitive information like account numbers and social security numbers. Submit your input and ideas by July 13, 2015. You can also submit an official comment online.

If you experience any problem with a student loan, you can submit a complaint online or call the CFPB at 855-411-2372. They will forward your complaint to the company and work to get a response from them.